Lowell Deeds

One of the assumptions about electronic recording that I’ve been operating under is that for the system to reach a mature, fully utilized state, we must first have an electronic queuing system that regulates the order of walk-in customers and electronically submitted documents. Now I’m not so sure if that’s necessary. In theory, the queue is a good idea. When a walk-in customer arrives at the registry, he first stops and a registration kiosk and enters his name and the number of documents he has to record after which he is assigned a sequential number representing his place in the queue. Incoming electronic recordings would automatically be assigned numbers in the same queue. Registry recording clerks would process the documents in the order presented by the queue. This would keep electronic recordings that arrived at busy times from being neglected in favor of human beings standing in line with documents to be recorded. While such a queue would prevent e-recordings from being forgotten, there are other ways to accomplish that same task that don’t carry the downside of the queue. What down side? What if a major national lender suddenly sends two dozen mortgages electronically. They would take up 24 places in the queue and all would have to be processed by the registry staff before any customer who subsequently arrived in person could be waited on. That’s not how it works now. Today, a customer with many documents goes to a single recording terminal and we begin entering his documents while the next customers go to other recording terminals without having to wait for the first customer to have all of his documents recording. A queuing system would prevent us from doing even that. What is required is a disciplined approach to processing electronic recordings that handles them quickly but with common sense.

Last week, the Plymouth County Registry of Deeds began accepting deeds submitted electronically with excellent result, I’m told. Plymouth had launched electronic recording several months ago but had deferred taking deeds until now. Plymouth now joins Middlesex North as full-service electronic recording registries. Hampden County (Springfield) is also accepting documents filed electronically, but it’s my understanding that neither deeds nor mortgages are permitted as of yet. Other registries are inching closer to activating electronic recording systems. While the number of documents we receive electronically varies from day to day, throughout August we were routinely recording more than 20 electronic documents on many days which, with the very slow pace of overall recording activity, would represent more than 10% of our daily volume. As more registries turn on the system, I believe that our volume of e-recordings will rise substantially.

Earlier today I spent some time with other Massachusetts registers and representatives of ACS, Browntech, Ingeo, LandData and Simplifile discussing electronic recording in the Commonwealth. The good news is that two registries besides Middlesex North have commended e-recording. Register John Buckley of Plymouth County reported that they have already recorded more than 800 documents and have found the system to work “very well.” Because Plymouth has long operated two satellite recording offices, their users were already comfortable doing rundowns that involved documents they never saw, so they were mentally ready to accept e-recording. The folks from the Hamden County Registry of Deeds (in Springfield) had a similar report. They’ve only done about 50 documents but described the process as “flawless” and have rejected only four documents, all because they were registered land. Overall, the folks in attendance seemed optimisitc that the widespread rollout of electronic recording might very well become a reality in Massachusetts during 2008.

At a recent gathering of all of the state’s registers of deeds, we received updates on the state of electronic recording around the Commonwealth. As readers of this blog know, we have been recording documents electronically here in Lowell since June 2005 with more than 5000 documents finding their way into our records via this means. Now, three other registries have joined us: Plymouth began electronic recording back in late 2007. They are proceeding gradually, just accepting discharges from a few local customers right now. Hampden (in Springfield) has been working closely with a company called LandData and that registry is ready to launch its e-recording system. And Worcester is in final meetings with ACS and Simplifile to allow both of those companies to submit documents.

Earlier this week at the Fall Register of Deeds meeting, we discussed how to move forward with electronic recording. Right now, Lowell has been recording documents electronically for more than two years, having recorded 5000+ documents by that method. Now, some of the registries that still are within county government (and who therefore retain more technological independence) are moving forward in a tangible way and should start receiving documents electronically in the coming weeks. The registries that are within the Secretary of State’s office have been on hold, more or less, and the reason for that has not been entirely clear to me. Now, however, we have a plan for moving forward. We will document the electronic recording process and take it to you, the potential users. If you (and representatives of the title insurance industry) find it acceptable, we should be able to turn electronic recording on at all of the registries. It really won’t take off (i.e., be widely accepted by our users) until that happens because if you’re going to go to the effort to learn how to do electronic recording and set up your internal processes to handle it, you’ll want to do it universally, not at just a handful of registries. There’s no timetable yet but hopefully we’ll have something to share with you all by Thanksgiving.

About 30 people attended the Simplifile electronic recording seminar this past Tuesday at the DoubleTree Hotel in Lowell. Simplifile’s president even flew in from the companies headquarters in Utah. The local rep, Paul Roth (a Burlington, MA attorney) first demonstrated the Simplifile customer interface. At their most basic level, all electronic recording software allows a user to transmit images of original documents along with data about the document that is entered by the customer to the registry for immediate recording. Paul took the presentation up to pressing the “send to the registry” button at which time I took over, showing how the registry processes incoming electronic recordings. In the questions that followed, the audience of experienced real estate lawyers seemed most interested in the “gap” that exists betwen the final rundown on the registry’s website and the time of recording. Everyone recognizes that this is typically only a few minutes, but it is something that must be addressed. Right now, it seems that most title insurance companies are perfectly willing to cover that gap although they don’t seem to be putting anything in writing so far. Although this meeting was hosted and arranged by Simplifile, I’ve already done another such meeting with eRX, another company that does e-recording with us and I will make myself available to any company or group that has an interest in discussing e-recording.

With more and more people submitting documents electronically every day, I thought it might be helpful to share the internal checklist we use when processing such recordings. These are the things we look for:

How many documents are in the payload?
Is the fee correct?
What town is the property in? Is that town in our district?
Is there a Recorded Land book and page (i.e., No Registered Land)?
Is the document signed and notarized?
How many pages are in the documents?
Is each page a good quality image?
Is the document type correct?
Is the consideration correct?
Are the names correct?
Is there any reason why this document should not be recorded?
RECORD THE DOCUMENT

Next Tuesday, October 9, 2007 at 4 p.m. at the DoubleTree Hotel, 50 Warren Street in Lowell, I will be participating in a seminar on Electronic Recording hosted by Simplifile, one of the four companies now submitting documents to the Middlesex North Registry for electronic recording. Since we began electronic recording back in June, 2005, we have recorded more than 5000 documents via this technology. Of the 5000, 52% have been discharges, 28% mortgages and 22% other types (mostly assignments). The technology works very well and presents us with far fewer problems than the traditional walk-in recording process. If you’re interested in attending this seminar which will feature a demonstration of the Simplifile customer submission module and a presentation by me of what happens when an electronically submitted document arrives at the registry, just contact Paul Roth, Simplifile’s Sales Director at 781-552-1148.

There are several reasons. While there used to be just one, there are now four companies providing electronic recording services: eRX, Simplifile, Ingeo and Stewart Title. The resulting competition has created a sense of urgency as each company seeks to signup early adopters of this new technology. Another reason for rising interest in electronic recording is the changing nature of conveyancing. Now that home mortgages have become just another commodity to be funneled to Wall Street for repackaging, the speed with which the transaction is consummated and the documentation routed to the investment bankers becomes crucial. Every aspect of the mortgage process is automated except for recording. My sense is that the mortgage industry is applying pressure on conveyancers to remove that speed bump by moving to electronic recording as quickly as possible. In a strange way, the current real estate slowdown has also contributed to this newfound interest in e-recording. A lawyer doing ten closings per day two years ago didn’t have time to learn and adopt new technologies; with only ten closing each week these days, that same lawyer has more time to investigate a new way of doing things.

While this registry does not endorse or recommend any intermediary company, you may obtain information about the respective services they provide by calling Paula Steger of eRX at (214) 887-7473, Paul Roth of Simplifile at (781) 552-1148, Greg Brown of Ingeo at (770) 643-9920 or Mike Agen of Stewart Title at (800) 732-5113. For general information about electronic recording and how this registry has implemented it, visit our blog at www.lowelldeeds.com/blog or call me at (978) 322-9000 or send me an email at lowelldeeds@comcast.net.

We received our first electronic recordings from Simplifile late this morning. A set of six documents was submitted by a local law office and recorded by us without any difficulties. This is further evidence of the explosive expansion of electronic recording that is now underway. In addition to this e-filing news, we also made a slight modification to our scan and return process to better prepare ourselves for the complete transition to that method of recording next Monday morning. Now, when a document is recorded, we immediately scan it and return it to the customer. In today’s change, we have asked the customers to move to the Customer Service area which is where their documents will be returned. (Formerly, the customer just stood around the recording counter area, creating a feeling that it was more crowded than it really was). We have also injected a verification step into the process. Before the documents are handed back to the customer, one of our employees checks the images to confirm that we have good images before the original documents are handed back to the customer.

During the past few weeks, there has been a distinct surge in the level of interest in electronic recording. Two new companies, Simplifile and LandData (working with Stewart Title) are about to join eRX as electronic document middlemen. The two new companies have local attorneys as their target audience. If anyone would like more information about this process, please send me your questions by email and I’ll respond. We’ve been recording at least a dozen electronically submitted documents per day for the past two years. The system works quite well. It’s much more efficient for both us and the customer than is the walk-in process I predict that by the first of the year, the percentage of our overall recordings that are submitted electronically will approach 20% or more..

This morning I met with Paul Roth, the new Regional Sales Director for Simplifile, a Utah-based, national leader in the electronic recording field. Paul is a graduate of Suffolk University Law School and has been an attorney for nearly 20 years, most recently with an office in Burlington where he concentrated on real estate. Previously, however, he was a long-time sales representative for West Publishing (they used to use attorneys for that job), so he knows his way around the courts and law offices of New England. We have been establishing and then testing our electronic connections with Simplifile for several months now and from our perspective, we’re ready to receive documents submitted by their customers. In the coming week or two, I’ll write several posts about electronic recording to bring everyone up to date. In the meantime, if you’re interested in learning more about Simplifile, give Paul a call at 781/552-1148 or send him an email.

Today I attended presentations by the director of ACS’s electronic recording division (called eRX) and by the president of Simplifile which is another company that does electronic recording. Two years ago at the Middlesex North Registry, we began a pilot program for electronic recording in Massachusetts. Since then, we’ve recorded more than 5000 documents, mostly mortgages and mortgage discharges. The system works fine although it hasn’t yet gained widespread acceptance in the Commonwealth. Part of the problem, I suspect, is that only one registry takes documents that way, and the submitters don’t want to expend the effort to train staff to submit documents to just one of 21 registries. That may be changing, however. As was made clear this morning, the mortgage industry has changed tremendously in the past five years. Everything now is about speed and automation, to get the executed and recorded mortgage to Wall Street where it can be added to a pool and sold to investors as a commodity. Thus far, every step of the process but recording is done electronically, but then the speedy flow comes to a screeching halt as a paper document is created and recorded much the same way it was done a hundred years ago. So there is a great deal of interest in the financial industry in getting registries to adopt electronic recording. This would remove the last speed bump to fully electronic mortgages in a business where more than ever, time is money.

Here’s how I see the responsibilities of the respective parties involved in the electronic recording process:

Responsibilities of Customer
· Present proof of membership in eligible class (see above)
· Maintain security of connection with Agent
· Provide active point of contact to each Registry
· Submit documents in accordance with Mass. Law and Deed Indexing Standards
· Fully cooperate with Agent and Registry in resolving any recording problems

Responsibilities of Agent
· Establish secure network (VPN) from Customer to Agent
· Establish secure network (VPN) from Agent to Registry
· Pay any cost associated with establishing connection with Registry’s computer system
· Authenticate Customers
· Provide training and technical support to Customers
· Independently collect fees from Customers
· Solely responsible to Registry for paying all fees by start of day
· Post bond to secure payment of fees
· Maintain permanent audit trail of all Customer, Agent and Registry activity
· Fully comply with state rules of certification

Responsibilities of Registry
· “Open Standard” for computer connection
· Process electronic recordings as soon as possible
· Use statewide standardized QC procedures and rejections messages
· Immediate backup of incoming document images
· Reconcile accounts each day

The two-page handout I distributed and the PowerPoint presentation I used at the recent meeting are both online in PDF format in case you want to learn more about our view of electronic recording.

Back in 2003 when the state raised the registry of deeds recording fees, a $5 per document surcharge was also added. The proceeds of this fund were to be devoted to technology upgrades at the various registries of deeds. The same law that imposed the surcharge also created a Technology Advisory Committee that consisted of the Secretary of the Commonwealth, each Register of Deeds and representatives of the legal, banking, title insurance and surveying professions. That group met today in Boston to discuss electronic recording. I gave a presentation on our experience with the pilot program here in Middlesex North where we’ve recorded 2800 documents electronically during the past 18 months. My report also included recommendations, foremost of which was to move forward with electronic recording by activating the system at two additional registries by January 1. The registries in Worcester and Springfield volunteered to participate. While we are ready to proceed, there are still some very important details about electronic recording that must be resolved sooner rather than later. So we all agreed to reconvene in a type of electronic recording summit meeting after the first of the year to iron out some of the details. Please check back here this Thursday for more details about the rollout plan with links to the handout and PowerPoint presentation that I used at today’s meeting.